Exhibit 10.1
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EMTEC, INC.
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LOAN AND SECURITY AGREEMENT
Dated: ____________________, 2001
$10,000,000.00
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[FLEET CAPITAL LOGO]
TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY........................................................1
1.1 Revolving Credit Loans.................................................1
SECTION 2. INTEREST, FEES AND CHARGES...........................................2
2.1 Interest...............................................................2
2.2 Computation of Interest and Fees.......................................2
2.3 Commitment Fee.........................................................2
2.4 Unused Line Fee........................................................2
2.5 Collateral Management Fees.............................................3
2.6 Collection Charges.....................................................3
2.7 Audit and Appraisal Fees...............................................3
2.8 Letter of Credit Fee...................................................3
2.9 Reimbursement of Expenses..............................................4
2.10 Bank Charges...........................................................4
SECTION 3. LOAN ADMINISTRATION....................................................4
3.1 Manner of Borrowing Revolving Credit Loans.............................4
3.2 Payments...............................................................7
3.3 Mandatory Prepayments..................................................8
3.4 Application of Payments and Collections................................8
3.5 All Loans to Constitute One Obligation.................................9
3.6 Loan Account...........................................................9
3.7 Statements of Account..................................................9
3.8 Increased Costs........................................................9
3.9 Basis for Determining Interest Rate Inadequate or Unfair..............10
SECTION 4. TERM AND TERMINATION.................................................11
4.1 Term of Agreement.....................................................11
4.2 Termination...........................................................11
SECTION 5. SECURITY INTERESTS....................................................12
5.1 Security Interest in Collateral.......................................12
5.2 Other Collateral.......................................................13
5.3 Lien Perfection; Further Assurances...................................14
SECTION 6. COLLATERAL ADMINISTRATION............................................14
6.1 General...............................................................14
6.2 Administration of Accounts............................................15
6.3 [THIS SECTION WAS INTENTIONALLY LEFT BLANK]...........................17
6.4 Administration of Equipment...........................................17
6.5 Payment of Charges....................................................17
SECTION 7. REPRESENTATIONS AND WARRANTIES.........................................18
7.1 General Representations and Warranties................................18
7.2 Continuous Nature of Representations and Warranties...................23
7.3 Survival of Representations and Warranties............................23
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS....................................24
8.1 Affirmative Covenants.................................................24
8.2 Negative Covenants....................................................26
8.3 Specific Financial Covenants..........................................28
SECTION 9. CONDITIONS PRECEDENT...................................................29
9.1 Documentation.........................................................29
9.2 No Default............................................................29
9.3 Other Loan Documents..................................................29
9.4 Availability..........................................................29
9.5 No Litigation.........................................................29
9.6 Other Conditions......................................................29
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT......................30
10.1 Events of Default.....................................................30
10.2 Acceleration of the Obligations.......................................32
10.3 Other Remedies........................................................32
10.4 Remedies Cumulative; No Waiver........................................33
SECTION 11. MISCELLANEOUS..........................................................33
11.1 Power of Attorney.....................................................34
11.2 Indemnity.............................................................34
11.3 Modification of Agreement; Sale of Interest...........................35
11.4 Severability..........................................................35
11.5 Successors and Assigns................................................35
11.6 Cumulative Effect; Conflict of Terms..................................35
11.7 Execution in Counterparts.............................................35
11.8 Notice................................................................36
11.9 Lender's Consent......................................................37
11.10 Credit Inquiries......................................................37
11.11 Time of Essence.......................................................37
11.12 Entire Agreement......................................................37
11.13 Interpretation........................................................37
11.14 GOVERNING LAW; CONSENT TO FORUM.......................................37
11.15 WAIVERS BY BORROWER...................................................38
GENERAL DEFINITIONS.............................................................41
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this day of November 21, 2001,
by and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 0000 Xxxxx 00, Xxxxxxxxxx, XX 00000-0000; and EMTEC, INC.
("Borrower"), a New Jersey corporation with its chief executive office and
principal place of business at 000 Xxxx Xxxx Xxxxx, Xxxxx Xxxxxx, XX 00000.
Capitalized terms used in this Agreement have the meanings assigned to them in
Appendix A, General Definitions. Accounting terms not otherwise specifically
defined herein shall be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $10,000,000.00
available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to Borrower
from time to time, as requested or as deemed requested by Borrower in the manner
set forth in subsection 3.1.1 hereof, up to a maximum principal amount at any
time outstanding equal to the Borrowing Base at such time minus reserves, if
any. Lender shall have the right to establish reserves in such amounts, and with
respect to such matters, as Lender shall deem necessary or appropriate, against
the amount of Revolving Credit Loans which Borrower may otherwise request under
this subsection 1.1.1, including, without limitation, with respect to (i) price
adjustments, damages, unearned discounts, returned products or other matters for
which credit memoranda are issued in the ordinary course of Borrower's business;
(ii) shrinkage, spoilage and obsolescence of Inventory; (iii) slow moving
Inventory; (iv) other sums chargeable against Borrower's Loan Account as
Revolving Credit Loans under any section of this Agreement; (v) amounts owing by
Borrower to any Person to the extent secured by a Lien on, or trust over, any
Property of Borrower; (vi) rent to landlords who have not delivered a landlord's
waiver to Lender; and (vii) such other matters, events, conditions or
contingencies as to which Lender, in its sole credit judgment, determines
reserves should be established from time to time hereunder. The Revolving Credit
Loans shall be further evidenced by the Revolving Credit Note and shall be
secured by all of the Collateral.
1.1.2 Issuance of the Letter of Credit. Lender agrees, on the Closing
Date to cause the Bank to issue the Letter of Credit for the account of
Borrower.
1.1.3 Use of Proceeds. The Revolving Credit Loans shall be used solely
for the satisfaction of existing Indebtedness of Borrower to IBM Credit
Corporation and for Borrower's
general operating capital needs in a manner consistent with the provisions of
this Agreement and all applicable laws.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. Interest shall accrue on the Revolving
Credit Loans in accordance with the terms of the Revolving Credit Note. Interest
shall accrue on the principal amount of the Base Rate Advances outstanding at
the end of each day at a fluctuating rate per annum equal to 0.25% plus the Base
Rate. Interest shall accrue on the principal amount of each of the LIBOR
Advances outstanding at the end of each day at a fixed rate per annum equal to
2.75% plus LIBOR for the applicable Interest Period. The rate of interest
applicable to Base Rate Advances shall increase or decrease by an amount equal
to any increase or decrease in the Base Rate, effective as of the opening of
business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, the principal amount
of all Loans shall bear interest at a rate per annum equal to 3% above the
interest rate otherwise applicable thereto (the "Default Rate"). Lender shall
charge and collect the Default Rate in a commercially reasonable manner.
2.1.3 Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest under the Revolving Credit Note and
charged or collected pursuant to the terms of this Agreement or pursuant to the
Revolving Credit Note exceed the highest rate permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. If any provisions of this Agreement or the Revolving Credit Note are in
contravention of any such law, such provisions shall be deemed amended to
conform thereto.
2.2 Computation of Interest and Fees. Interest, unused line fees and
collection charges hereunder shall be calculated daily and shall be computed on
the actual number of days elapsed over a year of 360 days. For the purpose of
computing interest hereunder, all items of payment received by Lender shall be
deemed applied by Lender on account of the Obligations (subject to final payment
of such items) on the 2nd Business Day after receipt by Lender of such items in
Lender's account located in Pennsauken, New Jersey.
2.3 Commitment Fee. Borrower shall pay to Lender a commitment fee of
$25,000.00, which shall be fully earned and nonrefundable on the Closing Date.
The commitment fee shall be paid in twelve (12) consecutive equal installments
commencing on the Closing Date and continuing on the first day of each of the
next eleven (11) calendar months following the Closing Date.
2.4 Unused Line Fee. Borrower shall pay to Lender an unused line fee
equal to .125% per annum of the average monthly amount by which the Total Credit
Facility exceeds the sum of the outstanding principal balance of the Revolving
Credit Loans; provided that from and
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after December 31, 2001, the unused line fee shall be calculated in accordance
with the table and text below:
Leverage Ratio is: Unused Line Fee
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Greater than 5.0:1.0 .125%
Less than or equal to 5.0:1.0 .0625%
The calculation of the unused line fee pursuant to the above table shall be made
quarterly based upon the financial statements of Borrower for such period. In
the event the unused line fee changes, such change shall become effective as of
the first day of the month immediately following the month in which Borrower's
quarterly statements used in such calculation are delivered to Lender. The
unused line fee, once reset, shall remain in effect for not less than ninety
(90) days. The unused line fee shall be payable (i) quarterly in arrears
commencing on December 31, 2001 and on the last day of each calendar quarter
thereafter and (ii) the earlier of (1) termination of this Agreement pursuant to
Section 4 hereof or (2) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations.
2.5 Collateral Management Fees. Borrower shall pay to Lender a
collateral management fee of $300.00 per month payable monthly in arrears on the
first day of each calendar month hereafter. In addition to such monthly fee,
Borrower shall reimburse Lender for field exam expenses at a rate of $750.00 per
man or woman, per day.
2.6 Collection Charges. If items of payment are received by Lender at
a time when there are no Revolving Credit Loans outstanding, such items of
payment shall be subject to a collection charge equal to two (2) days' interest
on the amount thereof at the rate then applicable to Base Rate Advances, which
collection charges shall be payable on the first Business Day of each month.
2.7 Audit and Appraisal Fees. Borrower shall pay to Lender audit and
appraisal fees in accordance with Lender's current schedule of fees in effect
from time to time in connection with audits and appraisals of Borrower's books
and records and such other matters as Lender shall deem appropriate, plus all
reasonable out-of-pocket expenses incurred by Lender in connection with such
audits and appraisals, provided that prior to a Default or Event of Default,
Borrower shall only be required to reimburse Lender for audit fees for up to the
first three (3) days of each audit. Audit fees shall be payable on the first day
of the month following the date of issuance by Lender of a request for payment
thereof to Borrower.
2.8 Letter of Credit Fee. Borrower shall pay to Lender a letter of
credit fee calculated at a rate per annum equal to .5% of the face amount of the
Letter of Credit payable on December 31, 2001 for the period then ending and
thereafter quarterly in arrears on the last day of each calendar quarter, and on
the Termination Date. With respect to the issuance, amendment, transfer,
administration or cancellation of the Letter of Credit and each drawing made
thereunder, documentary and processing charges in accordance with the Bank's
standard schedule for such
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charges in effect at the time of such issuance, amendment, transfer,
administration, cancellation or drawing, as the case may be, or as otherwise
agreed to by the Bank.
2.9 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs legal or
accounting expenses or any other costs or out-of-pocket expenses in connection
with (i) the negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents; (ii) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; (iii)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any of the other Loan Documents or Borrower's affairs; (iv)
any attempt to enforce any rights of Lender against Borrower or any other Person
which may be obligated to Lender by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or (v) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of Lender shall be
charged to Borrower. All amounts chargeable to Borrower under this Section 2.8
shall be Obligations secured by all of the Collateral, shall be payable on
demand to Lender and shall bear interest from the date such demand is made until
paid in full at the rate applicable to Base Rate Advances from time to time.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.
2.10 Bank Charges. Borrower shall pay to Lender, on demand, any and
all fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with (i) the forwarding to Borrower
or any other Person on behalf of Borrower, by Lender, of proceeds of loans made
by Lender to Borrower pursuant to this Agreement and (ii) the depositing for
collection, by Lender, of any check or item of payment received or delivered to
Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the
credit facility established pursuant to Section 1 hereof shall be made as
follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall
be made, or shall be deemed to be made, in the following manner: (i) Borrower
may give Lender notice of its intention to borrow, in which notice Borrower
shall specify the amount of the proposed borrowing and the proposed borrowing
date and, if applicable, wiring instructions as set forth below, no later than
11:00 a.m. New York City time on the proposed borrowing date, provided, however,
that no such request may be made at a time when there exists a Default or an
Event of Default; and (ii) the becoming due of any amount required to be paid
under this Agreement, whether as a drawing under the Letter of Credit, as
interest or for any other Obligation, shall be deemed irrevocably to be a
request for a Revolving Credit Loan on the due date in the amount required to
pay such interest or other Obligation. As an accommodation to Borrower, Lender,
at
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Borrower's request, will wire transfer Revolving Credit Loan proceeds into an
operating account maintained by Borrower in a state in which Bank does not
maintain branches. As an accommodation to Borrower, Lender may permit telephonic
or electronic requests for loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Lender
to disburse the proceeds of each Revolving Credit Loan requested, or deemed to
be requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
Borrower's Loan Account hereunder as a Base Rate Advance, a sum sufficient to
pay all interest accrued on the Obligations during the immediately preceding
month and to pay all costs, fees and expenses at any time owed by Borrower to
Lender hereunder.
3.1.4 LIBOR Advances. Notwithstanding the provisions of
subsection 3.1.1, in the event Borrower desires to obtain a LIBOR Advance,
Borrower shall give Lender prior, written, irrevocable notice no later than
11:00 A.M. New York City Time on the 2nd Business Day prior to the requested
borrowing date specifying (i) Borrower's election to obtain a LIBOR Advance,
(ii) the date of the proposed borrowing (which shall be a Business Day) and
(iii) the amount to be borrowed, which amount shall be in a minimum principal
amount of $100,000 and may increase in integral multiples of $100,000. In no
event shall (i) Borrower be permitted to have outstanding at any one time LIBOR
Advances with more than five (5) different Interest Periods and/or (ii) the sum
of the outstanding principal balance of LIBOR Advances exceed 50% of the sum of
the outstanding principal balance of Revolving Credit Loans. If at any time the
sum of the outstanding principal balance of LIBOR Advances exceed 50% of the sum
of the outstanding principal balance of Revolving Credit Loans, Borrower shall,
promptly upon request from Lender, convert LIBOR Advances into Base Rate
Advances to the extent necessary to cause the sum of the outstanding principal
balance of LIBOR Advances to be less than or equal to 50% of the sum of the
outstanding principal balance of Revolving Credit Loans and Borrower shall
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pay any amount required to be paid in connection with such conversion pursuant
to subsection 3.2.5 hereof.
3.1.5 Conversion of Base Rate Advances. Provided that no Default
or Event of Default has occurred which is then continuing, Borrower may convert
any Base Rate Advance into a LIBOR Advance pursuant to this subsection. If
Borrower desires to convert a Base Rate Advance, Borrower shall give Lender not
less than two (2) Business Days' prior written notice (prior to 11:00 A.M. New
York City Time on such Business Day), specifying the date of such conversion and
the amount to be converted. Each conversion into or conversion of a LIBOR
Advance shall be in a minimum principal amount of $100,000 and may increase in
integral multiples of $100,000 in excess thereof. After giving effect to any
conversion of Base Rate Advances to LIBOR Advances, Borrower must still be in
compliance with subsection 3.1.4 hereof.
3.1.6 Continuation of LIBOR Advances. Borrower shall have the
right on two (2) Business Days' prior irrevocable written notice given to Lender
by Borrower (prior to 11:00 A.M. New York City Time on such Business Day),
subject to the provisions hereof, to continue any LIBOR Advance into a
subsequent Interest Period of the same or a different permitted duration, in
each case subject to the satisfaction of the following conditions:
(i) in the case of a continuation of less than all LIBOR
Advances, the LIBOR Advances continued shall each be in a minimum
principal amount of $100,000 and may increase in integral
multiples of $100,000;
(ii) no LIBOR Advance (or portion thereof) may be continued
as a LIBOR Advance if a Default or Event of Default has occurred
which is then continuing or if, after giving effect to such
continuation, Borrower would not be in compliance with subsection
3.1.4 hereof.
If Borrower shall fail to give timely notice of its election to
continue any LIBOR Advance or portion thereof as provided above, or if such
continuation shall not be permitted, such LIBOR Advance or portion thereof,
unless such LIBOR Advance shall be repaid, shall automatically be converted into
a Base Rate Advance at the end of the Interest Period then in effect with
respect to such LIBOR Advance.
3.1.7 Inability to Make LIBOR Advances. Notwithstanding any other
provision hereof, if any applicable law, treaty, regulation or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for Lender (for purposes of this subsection 3.1.7, the term "Lender"
shall include the office or branch where Lender or any corporation or bank then
controlling any Lender makes or maintains any LIBOR Advances) to make or
maintain its LIBOR Advances, or if with respect to any Interest Period, Lender
is unable to determine the LIBOR relating thereto, or adverse or unusual
conditions in, or changes in applicable law relating to, the London interbank
market make it, in the reasonable judgment of Lender, impracticable to fund
therein any of the LIBOR Advances, or make the projected LIBOR unreflective of
the actual costs of funds therefor to Lender, the obligation of Lender to make
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LIBOR Advances hereunder shall forthwith be suspended during the pendency of
such circumstances and Borrower shall, if any affected LIBOR Advances are then
outstanding, promptly upon request from Lender, convert such affected LIBOR
Advances into Base Rate Advances.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.2 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Lender or Borrower of any proceeds of any of the Collateral,
to the extent of said proceeds, (ii) the occurrence of an Event of Default in
consequence of which Lender elects to accelerate the maturity and payment of the
Obligations, or (iii) termination of this Agreement pursuant to Section 4
hereof; provided, however, that if an Overadvance shall exist at any time,
Borrower shall, on demand, repay the Overadvance. Each payment (including
principal prepayment) by Borrower on account of principal of the Revolving
Credit Loans shall be applied first to Base Rate Advances, then to LIBOR
Advances; provided, however, if any payment is received when the sum of the
outstanding principal balance of LIBOR Advances exceeds 50% of the sum of the
outstanding principal balance of Revolving Credit Loans, such payment shall be
applied first to LIBOR Advances to the extent necessary to cause the outstanding
principal balance of LIBOR Advances to be equal to or less than 50% of sum of
the outstanding principal balance of Revolving Credit Loans.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans
shall be due on the earliest of (i) the first day of each month (for the
immediately preceding month), computed through the last day of the preceding
month, (ii) the occurrence of an Event of Default in consequence of which Lender
elects to accelerate the maturity and payment of the Obligations or (iii)
termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.
3.2.5 Prepayment of LIBOR Advances. Borrower may prepay a LIBOR
Advance only upon at least three (3) Business Days prior written notice to
Lender (which notice shall be irrevocable), and any such prepayment shall occur
only on the last day of the Interest Period for such LIBOR Advance. Borrower
shall pay to Lender, upon request of Lender, such amount or amounts as shall be
sufficient (in the reasonable opinion of Lender) to compensate Lender for any
loss, cost, or expense incurred as a result of: (i) any payment of a LIBOR
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Advance on a date other than the last day of the Interest Period for such Loan;
(ii) any failure by Borrower to borrow a LIBOR Advance on the date specified by
Borrower's written notice; or (iii) any failure by Borrower to pay a LIBOR
Advance on the date for payment specified in Borrower's written notice. Without
limiting the foregoing, Borrower shall pay to Lender a "yield maintenance fee"
in an amount computed as follows: the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the Interest Period chosen pursuant to the LIBOR
Advance as to which the prepayment is made, shall be subtracted from the LIBOR
in effect at the time of prepayment. If the result is zero or a negative number,
there shall be no yield maintenance fee. If the result is a positive number,
then the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the Interest Period chosen
pursuant to the LIBOR Advance as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days remaining in the
term chosen pursuant to the LIBOR Advance as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to Lender upon the
prepayment of a LIBOR Advance. If by reason of an Event of Default, Lender
elects to declare the Obligations to be immediately due and payable, then any
yield maintenance fee with respect to a LIBOR Advance shall become due and
payable in the same manner as though the Borrower had exercised such right of
prepayment.
3.3 Mandatory Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. Except as provided in subsection 6.4.2 hereof, if Borrower sells any
of the Equipment, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to Lender, unless otherwise agreed by Lender,
as and when received by Borrower and as a mandatory prepayment of the Revolving
Loan, a sum equal to the proceeds (including insurance payments) received by
Borrower from such sale, loss, destruction or condemnation.
3.4 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, New York City time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, New York City time, on any Business Day shall be deemed received on
the following Business Day. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lender shall have the continuing exclusive right
to apply and reapply any and all such payments and collections received at any
time or times hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by Lender upon
any of its books and records. If as the result of collections of Accounts as
authorized by subsection 6.2.6 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists. Such credit balance shall not be applied or be deemed
to have been applied as a prepayment of
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the Revolving Credit Loan, except that Lender may, at its option, offset such
credit balance against any of the Obligations upon and after the occurrence of
an Event of Default.
3.5 All Loans to Constitute One Obligation. The Loans shall
constitute one general Obligation of Borrower, and shall be secured by Lender's
Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the Loan
Account and shall also record in the Loan Account all payments made by Borrower
on any Obligations and all proceeds of Collateral which are finally paid to
Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly
with a statement of Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days of the date each accounting is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8 Increased Costs. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of Lender therewith, shall:
(i) (1) subject Lender to any tax with respect to this Agreement
(other than (a) any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without
limitation, any franchise tax or any similar tax based on capital, net
worth or comparable basis for measurement and (b) any tax collected by
a withholding on payments and which neither is computed by reference
to the net income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of the
payee) or (2) change the basis of taxation of payments to Lender of
principal, fees, interest or any other amount payable hereunder or
under any Loan Documents (other than in respect of (a) any tax based
on or measured by net income or otherwise in the nature of a net
income tax, including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis for
measurement and (b) any tax collected by a withholding on payments and
which neither is computed by reference to the net income of the payee
nor is in the nature of an advance collection of a tax based on or
measured by the net income of the payee);
(ii) impose, modify or hold applicable any reserve (except any
reserve taken into account in the determination of the applicable
LIBOR), special deposit, assessment or similar requirement against
assets held by, or deposits in or for the account
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of, advances or loans by, or other credit extended by, any office of
Lender, including (without limitation) pursuant to Regulation D of the
Board of Governors of the Federal Reserve System; or
(iii) impose on Lender or the London interbank market any other
condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining Loans hereunder by an amount that Lender deems
to be material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Loans by an amount that Lender
deems to be material, then, in any such case, Borrower shall pay Lender, upon
demand and certification not later than sixty (60) days following its receipt of
notice of the imposition of such increased costs, such additional amount as will
compensate Lender for such additional cost or such reduction, as the case may
be, to the extent Lender has not otherwise been compensated, with respect to a
particular Loan, for such increased cost as a result of an increase in the Base
Rate or the LIBOR. An officer of Lender shall determine the amount of such
additional cost or reduced amount using reasonable averaging and attribution
methods and shall certify the amount of such additional cost or reduced amount
to Borrower, which certification shall include a written explanation of such
additional cost or reduction to Borrower. Such certification shall be conclusive
absent manifest error. If Lender claims any additional cost or reduced amount
pursuant to this Section 3.8, then Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
lending office or to file any certificate or document reasonably requested by
Borrower if the making of such designation or filing would avoid the need for,
or reduce the amount of, any such additional cost or reduced amount and would
not, in the sole discretion of Lender, be otherwise disadvantageous to Lender.
If Lender claims any additional cost or reduced amount pursuant to this Section
3.8, then Borrower may terminate this Agreement and prepay in full the
outstanding Revolving Credit Loans, all accrued and unpaid interest thereon and
any other amount due and owing hereunder (including the amount requested
pursuant to this Section 3.8 properly accruable to the date of prepayment) but
excluding any prepayment compensation which may otherwise be due under Section
4.2.3.
3.9 Basis for Determining Interest Rate Inadequate or Unfair. In the
event that Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR for
any Interest Period; or
(ii) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank market with respect
to a proposed LIBOR Advance, or a proposed conversion of a Base Rate
Advance into a LIBOR Advance; then
Lender shall give Borrower prompt written, telephonic or electronic notice of
the determination of such effect. If such notice is given, (i) any such
requested LIBOR Advance shall be made as a Base Rate Advance, unless Borrower
shall notify Lender no later than 10:00 A.M. (New York
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City Time) two (2) Business Days prior to the date of such proposed borrowing
that the request for such borrowing shall be canceled or made as an unaffected
type of LIBOR Advance, and (ii) any Base Rate Advance which was to have been
converted to an affected type of LIBOR Advance shall be continued as or
converted into a Base Rate Advance, or, if Borrower shall notify Lender, no
later than 10:00 A.M. (New York City Time) two (2) Business Days prior to the
proposed conversion, shall be maintained as an unaffected type of LIBOR Advance.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making
Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period of three (3) years from
Closing Date, through and including November __, 2004 .
4.2 Termination.
4.2.1 Termination by Lender. Lender may terminate this Agreement
without notice upon or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon at least ninety (90) days
prior written notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds or, with
respect to the Letter of Credit established cash collateral with the Bank in an
amount sufficient to cover all draws thereunder and any fee and cost due in
accordance with subsection 2.8. Any notice of termination given by Borrower
shall be irrevocable unless Lender otherwise agrees in writing, and Lender shall
have no obligation to make any Loans on or after the termination date stated in
such notice. Borrower may elect to terminate this Agreement in its entirety
only. No section of this Agreement or type of Loan available hereunder may be
terminated singly.
4.2.3 Termination Charges. At the effective date of termination
of this Agreement for any reason, Borrower shall pay to Lender (in addition to
the then outstanding principal, accrued interest and other charges owing under
the terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to 2%
of the Total Credit Facility if termination occurs prior to the first
anniversary of Closing Date and 1% of the Total Credit Facility if termination
occurs on or after the first anniversary of Closing Date but prior to the second
anniversary of Closing Date, provided however that, if Lender terminates this
Agreement (other than as a result of an Event of Default under subsections
10.1.1, 10.1.2, 10.1.3 or 10.1.10), then the foregoing charges shall be reduced
by 50%. If termination occurs on or after the second anniversary of Closing
Date, no termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the Termination Date. All undertakings,
agreements, covenants, warranties and representations of Borrower contained in
the Loan Documents shall survive any such
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termination and Lender shall retain its Liens in the Collateral and all of its
rights and remedies under the Loan Documents notwithstanding such termination
until Borrower has paid the Obligations to Lender, in full, in immediately
available funds, together with the applicable termination charge, if any.
Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Lender may incur as a result of dishonored checks
or other items of payment received by Lender from Borrower or any Account Debtor
and applied to the Obligations, Lender shall, at its option, (i) have received a
written agreement, executed by Borrower and by any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the Obligations,
indemnifying Lender from any such loss or damage; or (ii) have retained such
monetary reserves and Liens on the Collateral for such period of time as Lender,
in its reasonable discretion, may deem necessary to protect Lender from any such
loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender and/or the Bank of the Obligations, Borrower hereby grants
to Lender a continuing Lien upon all of Borrower's assets, including all of the
following Property and interests in Property of Borrower, whether now owned or
existing or hereafter created, acquired or arising and wherever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications, and
any substitutions, replacements, additions or model conversions of any
of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
(x) Fixtures;
(xi) General Intangibles, including Payment Intangibles and
Software;
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(xii) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all other
personal property of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest therein, Lender will not enforce
its security interest in Borrower's rights under such lease or license (other
than in respect of the Proceeds thereof) for so long as such prohibition
continues, it being understood that upon request of Lender, Borrower will in
good faith use reasonable efforts to obtain consent for the creation of a
security interest in favor of Lender (and to Lender's enforcement of such
security interest) in such Lender's rights under such lease or license.
5.2 Other Collateral
5.2.1 Commercial Tort Claims. Borrower shall promptly notify
Lender in writing upon incurring or otherwise obtaining a Commercial Tort Claim
after the Closing Date against any third party and, upon request of Lender,
promptly enter into an amendment to this
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Agreement and do such other acts or things deemed appropriate by Lender to give
Lender a security interest in any such Commercial Tort Claim.
5.2.2 Other Collateral. Borrower shall promptly notify Lender in
writing upon acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit
Rights or Electronic Chattel Paper and, upon the request of Lender, promptly
execute such other documents, and do such other acts or things deemed
appropriate by Lender to deliver to Lender control with respect to such
Collateral; promptly notify Lender in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Documents or
Instruments and, upon the request of Lender, will promptly execute such other
documents, and do such other acts or things deemed appropriate by Lender to
deliver to Lender possession of such Documents which are negotiable and
Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of Lender; and with respect to
Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an acknowledgement from
the third party that it is holding the Collateral for the benefit of Lender.
5.3 Lien Perfection; Further Assurances. Borrower shall execute such
UCC-1 financing statements as are required by the UCC and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby irrevocably authorizes
Lender to execute and file any such financing statements, including, without
limitation, financing statements that indicate the Collateral (i) as all assets
of Borrower or words of similar effect, or (ii) as being of an equal or lesser
scope, or with greater or lesser detail, than as set forth in Section 5.1, on
Borrower's behalf. Borrower also hereby ratifies its authorization for Lender to
have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. The parties agree that a photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Lender any and all documents, instruments and agreements
deemed necessary by Lender to give effect to or carry out the terms or intent of
the Loan Documents.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by Borrower
and its Subsidiaries at one or more of the business locations set forth in
Exhibit B hereto and shall not, without the prior written approval of Lender, be
moved therefrom except, prior to an Event of Default and Lender's acceleration
of the maturity of the Obligations in consequence thereof, for (i) sales of
Inventory in the ordinary course of business; and (ii) removals in connection
with dispositions of Equipment that are authorized by subsection 6.4.2 hereof.
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6.1.2 Insurance of Collateral. Borrower shall maintain and pay
for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Borrower shall deliver the originals of such policies to
Lender with satisfactory lender's loss payable endorsements, naming Lender as
loss payee, assignee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth (15th) day of each month from
and after the date hereof, Borrower shall deliver to Lender, in form acceptable
to Lender, a detailed, aged trial balance of all Accounts existing as of the
last day of the preceding month, specifying the names, addresses, face value,
dates of invoices and due dates for each Account Debtor obligated on an Account
so listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies
of proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $25,000 become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrower shall notify Lender of such occurrence on the
first Business Day following such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. If requested by Lender,
Borrower shall execute and deliver to Lender formal written assignments
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of all of its Accounts weekly or daily, which shall include all Accounts that
have been created since the date of the last assignment, together with copies of
invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of $25,000 are in dispute
between Borrower and any Account Debtor, Borrower shall provide Lender with
written notice thereof at the time of submission of the next Schedule of
Accounts, explaining in detail the reason for the dispute, all claims related
thereto and the amount in controversy. Upon and after the occurrence of an Event
of Default, Lender shall have the right to settle or adjust all disputes and
claims directly with the Account Debtor and to compromise the amount or extend
the time for payment of the Accounts upon such terms and conditions as Lender
may deem advisable, and to charge the deficiencies, costs and expenses thereof,
including attorney's fees, to Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable
to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided, however that
Lender shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event
of Default has occurred, any of Lender's officers, employees or agents shall
have the right, at any time or times hereafter, in the name of Lender, any
designee of Lender, or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, electronic communication or
otherwise. Borrower shall cooperate fully with Lender in an effort to facilitate
and promptly conclude any such verification process.
6.2.5 Maintenance of Lockbox; Dominion Account. Borrower hereby
agrees to execute and deliver to Lender an irrevocable lockbox agreement on
Bank's standard form under which Borrower agrees to indicate on all invoices and
other correspondence with Account Debtors that all payments should be made and
sent in care of a post office box which will be under the exclusive control of
the Bank, as agent for Lender, and further under which Borrower will appoint the
Bank, as agent for the Lender, as Borrower's true and lawful attorney-in-fact to
receive and open all in-coming mail, remove all collections and remittances
therefrom in payment of or on account of any of Borrower's Accounts and use
Bank's reasonable efforts to forward all other mail received to Borrower. All
collections and remittances received by the Bank in the lockbox shall be
deposited into the Dominion Account. Borrower shall maintain the Dominion
Account at all times prior to the repayment in full of the Obligations and
termination of Lender's obligation to make Loans hereunder. Borrower shall issue
an irrevocable letter of instruction directing the Bank to deposit all payments
or other remittances received in the lockbox to the Dominion Account for
application on account of the Obligations. All funds deposited in the Dominion
Account shall immediately become the property of Lender and
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Borrower shall obtain the agreement by the Bank in favor of Lender to waive any
recoupment, setoff rights, and any security interest in, or against the funds so
deposited. Lender assumes no responsibility for such lockbox arrangement,
including, without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by the Bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender, directing all such payment to a lockbox established
pursuant to subsection 6.2.5. All remittances received by Borrower on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a Default
or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name, or in the
name of Lender's agent, and to charge the collection costs and expenses,
including attorneys' fees to Borrower.
6.3 [THIS SECTION WAS INTENTIONALLY LEFT BLANK]
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep
accurate records itemizing and describing the kind, type, quality, quantity and
value of its Equipment and all dispositions made in accordance with subsection
6.4.2 hereof, and shall furnish Lender with a current schedule containing the
foregoing information if requested by Lender. Immediately on request therefor by
Lender, Borrower shall deliver to Lender any and all evidence of ownership, if
any, of any of the Equipment.
6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $100,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrower shall have
given Lender at least five (5) days prior written notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Base Rate Advances from time to
time.
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SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter
into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
7.1.1 Organization and Qualification. Each of Parent, Borrower
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
Parent, Borrower and its Subsidiaries is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Exhibit C hereto and in all other states and
jurisdictions in which the failure of Parent, Borrower or any of its
Subsidiaries to be so qualified would have a material adverse effect on the
financial condition, business or Properties of Parent, Borrower or any of its
Subsidiaries.
7.1.2 Corporate Power and Authority. Each of Parent, Borrower and
its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders (or members, in the case of a limited liability company) of
Parent, Borrower or any of its Subsidiaries; (ii) contravene Parent's,
Borrower's or any of its Subsidiaries' charter, articles or certificate of
incorporation or by-laws; (iii) violate, or cause Parent, Borrower or any of its
Subsidiaries to be in default under, any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award in effect
having applicability to Parent, Borrower or any of its Subsidiaries; (iv) result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which Parent, Borrower
or any of its Subsidiaries is a party or by which it or its Properties may be
bound or affected; or (v) result in, or require, the creation or imposition of
any Lien (other than Permitted Liens) upon or with respect to any of the
Properties now owned or hereafter acquired by Parent, Borrower or any of its
Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each
of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Parent, Borrower and its
Subsidiaries enforceable against it in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit D hereto states (i) the correct
name of each of the Subsidiaries of Borrower, its jurisdiction of incorporation
and the percentage of its Voting Stock owned by Borrower, (ii) the name of each
of Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of all outstanding Securities
of each Subsidiary of Borrower and (iv) the number of authorized, issued and
treasury shares of Borrower and each Subsidiary of Borrower. Borrower has good
title to all of the shares it purports to own of the stock of each of its
Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and non-
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assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
There are no outstanding agreements or instruments binding upon any of
Borrower's shareholders (or members, in the case of a limited liability company)
relating to the ownership of its shares of capital stock (or member interests,
in the case of a limited liability company).
7.1.5 Corporate Names, etc. Neither Parent, Borrower nor any of
its Subsidiaries has been known as or used any corporate, fictitious or trade
names except those listed on Exhibit E hereto. Except as set forth on Exhibit E,
neither Parent, Borrower nor any of its Subsidiaries has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person. Each of Parent's, Borrower's and its Subsidiaries'
state(s) of incorporation or organization, Type of Organization and
Organizational I.D. Number is set forth on Exhibit E. The exact legal name of
Parent, Borrower and each of its Subsidiaries is set forth on Exhibit E.
7.1.6 Business Locations; Agent for Process. Each of Parent's,
Borrower's and its Subsidiaries' chief executive office and other places of
business are as listed on Exhibit B hereto. During the preceding one-year
period, neither Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process other than as listed on Exhibit B.
Except as shown on Exhibit B, no Inventory is stored with a bailee, warehouseman
or similar party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each of Parent,
Borrower and its Subsidiaries has good, indefeasible and marketable title to and
fee simple ownership of, or valid and subsisting leasehold interests in, all of
its real Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged all lawful claims which, if unpaid, might become
a Lien against any of Borrower's Properties that is not a Permitted Lien. The
Liens granted to Lender under Section 5 hereof are first-priority Liens, subject
only to Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which Accounts
are Eligible Accounts, on all statements and representations made by Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary course of
its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and
forming a part of the contract between Borrower and the Account
Debtor;
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(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy
of which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is
not, and will not (by voluntary act or omission of Borrower) be in the
future, subject to any offset, Lien, deduction, recoupment, defense,
dispute, counterclaim or any other adverse condition except for
disputes resulting in returned goods where the amount in controversy
is deemed by Lender to be immaterial, and each such Account is
absolutely owing to Borrower and is not contingent in any respect or
for any reason;
(v) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification
of any such Account or any deduction therefrom, except discounts or
allowances which are granted by Borrower in the ordinary course of its
business for prompt payment and which are reflected in the calculation
of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Lender pursuant to
subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to
reduce the amount payable thereunder from the face amount of the
invoice and statements delivered to Lender with respect thereto;
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract
or other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any material adverse
change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 Equipment. The Equipment is in good operating condition and
repair, and all necessary replacements of and repairs thereto shall be made so
that the value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrower will not permit any of
the Equipment to become affixed to any real Property leased to Borrower so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form acceptable to Lender, and
Borrower will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to first-priority (except
for Permitted Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The [Consolidated and
consolidating] balance sheets of Parent and its Subsidiaries as of March 31,
2001, and the related
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statements of income, changes in stockholder's equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly the financial position of Parent and such Persons
at such dates and the results of Parent's and such Persons' operations for such
periods. Since March 31, 2001, there has been no material change in the
condition, financial or otherwise, of Borrower and such other Persons as shown
on the Consolidated balance sheet as of such date and no change in the aggregate
value of Equipment and real Property owned by Borrower or such other Persons,
except changes in the ordinary course of business, none of which individually or
in the aggregate has been materially adverse. The fiscal year of Borrower ends
on March 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in
subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially affects adversely or, so far as Borrower can
now foresee, will materially affect adversely the Properties, business,
prospects, profits or condition (financial or otherwise) of Parent, Borrower or
any of its Subsidiaries or the ability of Parent, Borrower or its Subsidiaries
to perform this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each of Parent, Borrower and
its Subsidiaries is now and, after giving effect to the Loans to be made
hereunder, at all times will be, Solvent. 7.1.13 Surety Obligations. Neither
Parent, Borrower nor any of its Subsidiaries is obligated as surety or
indemnitor under any surety or similar bond or other contract, or has issued or
entered into any agreement to assure payment, performance or completion of
performance of any undertaking or obligation of any Person.
7.1.14 Taxes. Borrower's federal tax identification number is
00-0000000. The federal tax identification number of Parent and each of
Borrower's Subsidiaries is shown on Exhibit F hereto. Parent, Borrower and each
of its Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all taxes, assessments, fees, levies and other governmental charges
upon it, its income and Properties as and when such taxes, assessments, fees,
levies and charges are due and payable, unless and to the extent any thereof are
being actively contested in good faith and by appropriate proceedings and
Borrower maintains reasonable reserves on its books therefor. The provision for
taxes on the books of Parent, Borrower and its Subsidiaries are adequate for all
years not closed by applicable statutes, and for its current fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with the transactions
contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of
Parent, Borrower and its Subsidiaries owns or possesses all the patents,
trademarks, service marks, tradenames, copyrights and licenses necessary for the
present and planned future conduct of its
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business without any known conflict with the rights of others. All such patents,
trademarks, service marks, tradenames, copyrights, licenses and other similar
rights are listed on Exhibit G hereto.
7.1.17 Governmental Consents. Each of Parent, Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
7.1.18 Compliance with Laws. Each of Parent, Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all federal, state and local laws, rules and regulations applicable to Parent,
Borrower or such Subsidiary, as applicable, its Properties or the conduct of its
business and there have been no citations, notices or orders of noncompliance
issued to Parent, Borrower or any of its Subsidiaries under any such law, rule
or regulation. Each of Parent, Borrower and its Subsidiaries has established and
maintains an adequate monitoring system to insure that it remains in compliance
with all federal, state and local laws, rules and regulations applicable to it.
No Inventory has been produced in violation of the Fair Labor Standards Act (29
U.S.C. 'SS'201 et seq.), as amended.
7.1.19 Restrictions. Neither Parent, Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Neither Parent, Borrower nor
any of its Subsidiaries is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Exhibit H hereto, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by Parent, Borrower or any of its
Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit I hereto, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of Borrower, threatened, against or affecting Parent, Borrower or any
of its Subsidiaries, or the business, operations, Properties, prospects, profits
or condition of Parent, Borrower or any of its Subsidiaries. Neither Parent,
Borrower nor any of its Subsidiaries is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither Parent, Borrower nor any of its Subsidiaries is in default, and no event
has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Money Borrowed.
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7.1.22 Leases. Exhibit J hereto is a complete listing of all
capitalized leases of Parent, Borrower and its Subsidiaries and Exhibit K hereto
is a complete listing of all operating leases of Parent, Borrower and its
Subsidiaries. Each of Parent, Borrower and its Subsidiaries is in full
compliance with all of the terms of each of its respective capitalized and
operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit L hereto,
neither Parent, Borrower nor any of its Subsidiaries has any Plan. Parent,
Borrower and each of its Subsidiaries is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could result in a material adverse change
in the financial condition of Parent, Borrower or any of its Subsidiaries exists
in connection with any Plan. Neither Parent, Borrower nor any of its
Subsidiaries has any withdrawal liability in connection with a Multi-employer
Plan.
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Parent, Borrower or any of its Subsidiaries
and any customer or any group of customers whose purchases individually or in
the aggregate are material to the business of Parent, Borrower or any of its
Subsidiaries, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially affect
adversely Parent, Borrower or any of its Subsidiaries or prevent Parent,
Borrower or any of its Subsidiaries from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
7.1.25 Labor Relations. Except as described on Exhibit M hereto,
neither Parent, Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Parent, Borrower's or
any of its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Parent's, Borrower's or its Subsidiaries' business or
operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement. Without
limiting the generality of the foregoing, each loan request made pursuant to
subsection 3.1.1 hereof shall constitute Borrower's reaffirmation, as of the
date of each such loan request, of each representation, warranty or other
statement made or furnished to Lender by or on behalf of Parent, Borrower, any
Subsidiary of Borrower, or Guarantor in this Agreement, any of the other Loan
Documents, or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto.
7.3 Survival of Representations and Warranties. All representations
and warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall
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survive the execution, delivery and acceptance thereof by Lender and the parties
thereto and the closing of the transactions described therein or related
thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall or
shall cause Parent or its Subsidiaries to:
8.1.1 Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of Parent, Borrower
and each of its Subsidiaries, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Parent's, Borrower's and each of its Subsidiaries' business,
assets, liabilities, financial condition, business prospects and results of
operations.
8.1.2 Notices. Promptly notify Lender in writing of the
occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading.
8.1.3 Financial Statements. Keep, and cause Parent and each
Subsidiary to keep, adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared and
furnished to Lender the following (all to be prepared in accordance with GAAP
applied on a consistent basis, unless Borrower's certified public accountants
concur in any change therein and such change is disclosed to Lender and is
consistent with GAAP):
(i) not later than ninety (90) days after the close of each
fiscal year of Borrower, unqualified, audited financial statements of
Parent and its Subsidiaries as of the end of such year, on a
Consolidated and consolidating basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender (except for a
qualification for a change in accounting principles with which the
accountant concurs);
(ii) not later than twenty-five (25) days after the end of
each month hereafter, including the last month of Borrower's fiscal
year, unaudited, interim financial statements of Parent and its
Subsidiaries as of the end of such month and of the portion of
Parent's fiscal year then elapsed, on a Consolidated and consolidating
basis, certified by the principal financial officer of Borrower as
prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Parent
and its Subsidiaries for such month and period subject only to changes
from audit and year-end adjustments and except that such statements
need not contain notes;
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(iii) promptly upon Lender's request, but in any event, (1)
on the last Business Day of each week and (2) with each request for a
Revolving Credit Loan, a Borrowing Base Certificate;
(iv) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements, financial statements or
reports which Borrower has made available to its shareholders (or
members, in the case of a limited liability company) and copies of any
regular, periodic and special reports or registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange, including without limitation, all forms
10k and 10q filed by Parent or Borrower; and
(v) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's and each of
its Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, Borrower shall forward to
Lender a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Lender a certificate of the aforesaid certified
public accountants certifying to Lender that, based upon their examination of
the financial statements of Borrower and its Subsidiaries performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is relying on
such financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection 8.1.3, Borrower shall cause to be prepared and
furnished to Lender a Compliance Certificate in the form of Exhibit N hereto
executed by the Chief Financial Officer of Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies
of all agreements between Parent, Borrower or any of its Subsidiaries and any
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
8.1.5 Projections. No later than thirty (30) days prior to the
end of each fiscal year of Borrower, deliver to Lender Projections of Borrower
for the forthcoming fiscal year, month by month.
8.1.6 Deposit and Brokerage Accounts. For each deposit account or
brokerage account that Borrower at any time opens or maintains, Borrower shall,
at Lender's request and option, pursuant to an agreement in form and substance
satisfactory to Lender, cause the depository bank or securities intermediary, as
applicable, to agree to comply at any time with instructions from Lender to such
depository bank or securities intermediary, as applicable,
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directing the disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of Borrower.
8.1.7 Primary Operating Accounts. While any of the Obligations
remain outstanding or Lender has any obligation to make Revolving Credit Loans,
Borrower shall keep its primary operating accounts at Fleet National Bank.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not, and it will not permit Parent and its Subsidiaries to:
8.2.1 Mergers; Consolidations; Acquisitions; Structural Changes.
Merge or consolidate, or permit Parent or any Subsidiary of Borrower to merge or
consolidate, with any Person; nor acquire, nor permit Parent or any of its
Subsidiaries to acquire, all or any substantial part of the Properties of any
Person; nor change Parent's, its or any of its Subsidiaries' state of
incorporation or organization or Type of Organization; nor change Parent's, its
or any of its Subsidiaries' legal names.
8.2.2 Loans. Make, or permit Parent or any Subsidiary of Borrower
to make, any loans or other advances of money (other than for salary, travel
advances, advances against commissions and other similar advances in the
ordinary course of business) to any Person.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to
exist, or permit Parent or any Subsidiary of Borrower to create, incur or suffer
to exist, any Indebtedness, except:
(i) Obligations owing to Lender;
(ii) accounts payable to trade creditors and current
operating expenses (other than for Money Borrowed) which are not aged
more than ninety (90) days from billing date or more than sixty (60)
days from the due date, in each case incurred in the ordinary course
of business and paid within such time period, unless the same are
being actively contested in good faith and by appropriate and lawful
proceedings; and Borrower or such Subsidiary shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrower or such Subsidiary and its independent
accountants;
(iii) Obligations to pay Rentals permitted by subsection
8.2.13;
(iv) Permitted Purchase Money Indebtedness;
(v) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in
the ordinary course of business; and
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(vi) Indebtedness not included in paragraphs (i) through (v)
above which does not exceed at any time, in the aggregate, the sum of
$200,000.
8.2.4 Affiliate Transactions. Enter into, or be a party to, or
permit Parent or any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of Parent's,
Borrower's or such Subsidiary's business and upon fair and reasonable terms
which are fully disclosed to Lender and are no less favorable to Borrower than
would obtain in a comparable arm's length transaction with a Person not an
Affiliate or stockholder of Parent, Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit
Parent or any Subsidiary of Borrower to create or suffer to exist, any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to
any of the provisions of ERISA) not yet due, or being contested in the
manner described in subsection 7.1.14 hereto, but only if in Lender's
judgment such Lien does not adversely affect Lender's rights or the
priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation, but only if payment in
respect of any such Lien is not at the time required and such Liens do
not, in the aggregate, materially detract from the value of the
Property of Borrower or materially impair the use thereof in the
operation of Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) such other Liens as appear on Exhibit 0 hereto; and
(vi) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Subordinated Debt. Make, or permit Parent or any Subsidiary
of Borrower to make, any payment of any part or all of any Subordinated Debt or
take any other action or omit to take any other action in respect of any
Subordinated Debt, except in accordance with the Subordination Agreement
relative thereto.
8.2.7 Distributions. Declare or make, or permit Parent or any
Subsidiary of Borrower to declare or make, any Distributions excluding
Distributions of Subsidiaries to Borrower.
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8.2.8 Capital Expenditures. Make Capital Expenditures (including,
without limitation, by way of capitalized leases) which, in the aggregate, as to
Borrower, exceed $400,000 during any fiscal year of Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of
any of, or permit Parent or any Subsidiary of Borrower to sell, lease or
otherwise dispose of any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except (i) sales of Inventory in the ordinary course of business for so
long as no Event of Default exists hereunder, (ii) a transfer of Property to
Borrower by a Subsidiary of Borrower or (iii) dispositions expressly authorized
by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to
issue any additional shares of its capital stock except director's qualifying
shares.
8.2.11 Guaranteed Sales, Etc. Make a sale to any customer on a
guaranteed sale, sale and return, sale on approval or consignment basis, or any
sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit Parent or
any Subsidiary of Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit Parent or any of its
Subsidiaries to become, a lessee under any operating lease (other than a lease
under which Parent, Borrower or any of its Subsidiaries is lessor) of Property
if the aggregate Rentals payable during any current or future period of twelve
(12) consecutive months under the lease in question and all other leases under
which Parent, Borrower or any of its Subsidiaries is then lessee would exceed
$300,000. The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of any lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Subsidiary of
Borrower.
8.3 Specific Financial Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing:
8.3.1 Leverage Ratio. Borrower will not permit the Leverage Ratio
to exceed 11.0:1.0 at any time, tested quarterly commencing December 31, 2001.
8.3.2 Debt Service Coverage Ratio. Borrower will not permit the
Debt Service Coverage Ratio to be less than 1.20:1.00 at any time as of the end
of any fiscal quarter calculated on a rolling four quarter basis beginning March
31, 2002.
8.3.3 Tangible Net Worth.
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(i) As of December 31, 2001, Borrower will not permit
Tangible Net Worth to be less than $1,842,000.00.
(ii) As of the end of each fiscal quarter ending from and
after March 31, 2002, Borrower will not permit Tangible Net Worth to
be less than Tangible Net Worth as of the end of the previous fiscal
quarter or year plus 40% of net profit earned during the fiscal
quarter then ending.
8.3.4 Prohibition on Losses. Borrower will not permit any
quarterly net losses beginning with the quarter ending March 31, 2002 and
thereafter, provided however that, it shall not be an Event of Default hereunder
if Borrower has a loss not to exceed $150,000 in any quarter so long as Borrower
does not have a loss in any of the three (3) quarters ending after the quarter
in which the loss occurs.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender, a duly executed copy of this Agreement and the other
Loan Documents, together with such additional documents, instruments and
certificates as Lender shall require in connection therewith from time to time,
all in form and substance satisfactory to Lender.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth
in the other Loan Documents shall have been satisfied.
9.4 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans contemplated hereby, and paid all closing
costs incurred in connection with the transactions contemplated hereby,
Availability shall not be less than $750,000.
9.5 No Litigation. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
court, governmental agency or legislative body to enjoin, restrain or prohibit,
or to obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.6 Other Conditions. Parent, Borrower and its Subsidiaries shall
have satisfied the other conditions precedent on the Closing Checklist attached
hereto as Appendix B.
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Note. Borrower shall fail to pay any
installment of principal, interest or premium, if any, owing on the Revolving
Credit Note after the due date of such installment.
10.1.2 Payment of Other Obligations. Borrower shall fail to pay
any of the Obligations that are not evidenced by the Revolving Credit Note on
the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Parent, Borrower, any
Subsidiary of Borrower, or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2, 5.3,
6.1.1, 6.1.2, 6.2.5, 6.2.6, 8.1, 8.2 or 8.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 10.1 hereof)
and the breach of such other covenant is not cured to Lender's satisfaction
within fifteen (15) days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure or neglect
first becomes known to any officer of Borrower.
10.1.6 Default Under Security Documents/Other Agreements. Any
event of default shall occur under, or Borrower shall default in the performance
or observance of any term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower under any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.
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10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of Borrower or any
Guarantor.
10.1.10 Insolvency and Related Proceedings. Parent, Borrower, any
Subsidiary of Borrower or any Guarantor shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or similar fiduciary,
or shall make an assignment for the benefit of creditors, or any petition for an
order for relief shall be filed by or against Parent, Borrower, any Subsidiary
of Borrower or any Guarantor under the Bankruptcy Code (if against Parent,
Borrower, any Subsidiary of Borrower or any Guarantor, the continuation of such
proceeding for more than thirty (30) days), or Parent, Borrower, any Subsidiary
of Borrower or any Guarantor shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Parent, Borrower, any
Subsidiary of Borrower or any Guarantor for a period which significantly affects
such Person's capacity to continue its business, on a profitable basis; or
Parent, Borrower, any Subsidiary of Borrower or any Guarantor shall suffer the
loss or revocation of any license or permit now held or hereafter acquired by
such Person which is necessary to the continued or lawful operation of its
business; or Parent, Borrower or any Guarantor shall be enjoined, restrained or
in any way prevented by court, governmental or administrative order from
conducting all or any material part of its business affairs; or any material
lease or agreement pursuant to which Parent, Borrower or any Guarantor leases,
uses or occupies any Property shall be canceled or terminated prior to the
expiration of its stated term; or any part of the Collateral shall be taken
through condemnation or the value of such Property shall be impaired through
condemnation.
10.1.12 Public Company Status. Parent shall not be a reporting
company under the Exchange Act or Parent's shares of common stock shall not be
eligible for public trading.
10.1.13 ERISA. A Reportable Event shall occur which Lender, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Parent, Borrower, any Subsidiary of Borrower or any
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multi-employer Plan resulting from Parent's,
Borrower's, such Subsidiary's or such Guarantor's complete or partial withdrawal
from such Plan.
10.1.14 Challenge to Agreement. Parent, Borrower, any Subsidiary
of Borrower or any Guarantor, or any Affiliate of any of them, shall challenge
or contest in any action, suit or proceeding the validity or enforceability of
this Agreement, or any of the other Loan Documents,
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the legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Lender.
10.1.15 Repudiation of or Default Under Guaranty Agreement. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.16 Criminal Forfeiture. Parent, Borrower, any Subsidiary of
Borrower or any Guarantor shall be criminally indicted or convicted under any
law that could lead to a forfeiture of any Property of Parent, Borrower, any
Subsidiary of Borrower or any Guarantor.
10.1.17 Judgments. Any money judgment, writ of attachment or
similar process is filed against Parent, Borrower, any Subsidiary of Borrower or
any Guarantor, or any of their respective Property.
10.2 Acceleration of the Obligations. Without in any way limiting the
right of Lender to demand payment of any portion of the Obligations payable on
demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand, protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations, provided, that upon the
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
other rights and remedies:
10.3.1 All of the rights and remedies of a secured party under
the UCC or under other applicable law, and all other legal and equitable rights
to which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
10.3.2 The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, and (ii) enter any premises where any of
the Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Seller may, at Seller's option,
disclaim any
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and all warranties regarding the Collateral in connection with any such sale.
Borrower agrees that ten (10) days written notice to Borrower of any public or
private sale or other disposition of Collateral shall be reasonable notice
thereof, and such sale shall be at such locations as Lender may designate in
said notice. Lender shall have the right to conduct such sales on Borrower's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with applicable law. Lender shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing two (2) Business Days for collection, first to
the costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral; second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrower and each Guarantor shall remain jointly and
severally liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of
Borrower contained in this Agreement or any of the other Loan Documents and no
Default or Event of Default by Borrower under this Agreement or any other Loan
Documents shall be deemed to have been suspended or waived by Lender, unless
such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrower.
SECTION 11. MISCELLANEOUS
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11.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
11.1.1 At such time or times upon or after the occurrence of a
Default or an Event of Default as Lender or said agent, in its sole discretion,
may determine, endorse Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control.
11.1.2 At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable and, at Lender's option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as Lender may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
Lender against and save it harmless from all claims of any Person with respect
to the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Notwithstanding any
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contrary provision in this Agreement, the obligation of Borrower under this
Section 11.2 shall survive the payment in full of the Obligations and the
termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement may
not be modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and Lender shall be relieved of all
obligations hereunder upon any such assignments. Borrower agrees that it will
use its best efforts to assist and cooperate with Lender in any manner
reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower, its Subsidiaries and any
Guarantor to any potential participant or assignee.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and
the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
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11.8 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, one Business Day after deposit in the mail, postage prepaid, or with an
overnight courier or, in the case of facsimile notice, when sent, addressed as
follows:
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If to Lender: Fleet Capital Corporation
0000 Xxxxx 00
Xxxxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx Xxxxxxxxx
Facsimile No.: (000) 000-0000
If to Borrower: Emtec, Inc.
000 Xxxx Xxxx Xxxxx
-
Xxxxx Xxxxxx, XX 00000
Attention: Xx. Xxx Xxxxx
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.
11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its reasonable
discretion and to condition its consent upon the giving of additional collateral
security for the Obligations, the payment of money or any other matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender
to respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries or any Guarantor.
11.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
NEW JERSEY. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY; PROVIDED, HOWEVER, THAT IF
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ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW
JERSEY, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF NEW JERSEY. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF CAMDEN COUNTY, NEW JERSEY, OR, AT LENDER'S OPTION, THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED
TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON
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PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY
OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN
ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN
THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND
(VI) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS
ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT
LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING
WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
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IN WITNESS WHEREOF, this Agreement has been duly executed in
____________, ____________, on the day and year specified at the beginning of
this Agreement.
ATTEST: EMTEC, INC.
("Borrower")
Xxxxxxxx Xxxxxxx By Xxxx Xxxxxxx
--------------------- ----------------------------------------
Secretary Title CEO
-------------------------------
Accepted in , :
--------- ------------
FLEET CAPITAL CORPORATION
("Lender")
By Xxxxx X. Xxxxxxx
----------------------------------
Title SVP
-------------------------------
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APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of November __,
2001, by and between Fleet Capital Corporation and Emtec, Inc., (a) the terms
Account, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Financial Asset,
Fixture, General Intangibles, Goods, Health-Care-Insurance Receivables,
Instrument, Inventory, Investment Property, Letter-of-Credit Rights, Payment
Intangibles, Proceeds, Security, Security Entitlement, Software, Supporting
Obligations, Tangible Chattel Paper and Uncertificated Security have the
respective meanings assigned thereto under the UCC (as defined below); (b) all
terms indicating Collateral having the meanings assigned thereto under the UCC
shall be deemed to mean such Property, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has or hereafter acquires any
interest; (c) capitalized terms which are not otherwise defined have the
respective meanings assigned thereto in said Loan and Security Agreement; and
(d) the following terms shall have the following meanings (terms defined in the
singular to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person who is or may become obligated on or
under or on account of any Account, Contract Right, Chattel Paper or
General Intangible.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii)
which beneficially owns or holds 5% or more of any class of the Voting
Stock of a Person; or (iii) 5% or more of the Voting Stock (or in the
case of a Person which is not a corporation, 5% or more of the equity
interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, all Exhibits thereto and this
Appendix A.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being
the difference derived when the sum of the principal amount of
Revolving Credit Loans then outstanding (including any amounts which
Lender may have paid for the account of Borrower pursuant to any of
the Loan Documents and which have not been reimbursed by Borrower) is
subtracted from the Borrowing Base. If the amount outstanding is equal
to or greater than the Borrowing Base, Availability is zero (0).
Bank - Fleet National Bank.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether
or not such rate is the lowest rate charged by Bank to its most
preferred borrowers; and, if such prime rate for commercial loans
is discontinued by Bank as a standard, a comparable reference
rate designated by Bank as a substitute therefor shall be the
Base Rate.
Base Rate Advances - any Loan bearing interest computed by
reference to the Base Rate.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) $10,000,000.00; or
(ii) an amount equal to:
(a) 85% of Eligible Accounts outstanding at such
date
MINUS
(b) the face amount of the Letter of Credit
For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less
any and all returns, rebates, discounts (which may, at Lender's
option, be calculated on shortest terms), credits, allowances or
excise taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection
with such Accounts at such time.
Borrowing Base Certificate - a certificate by a responsible
officer of Borrower, substantially in the form of Exhibit P (or
another form acceptable to Lender) setting forth the calculation
of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be satisfactory to Lender.
All calculations of the Borrowing Base in connection with the
preparation of any Borrowing Base Certificate shall originally be
made by Borrower and certified to Lender; provided, that Lender
shall have the right to review and adjust, in the exercise of its
reasonable credit judgment, any such calculation after giving
notice thereof to the Borrower, (1) to reflect its reasonable
estimate of declines in value of any of the Collateral described
therein, and (2) to the extent that such calculation is not in
accordance with this Agreement.
Business Day - any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the State of New
Jersey or is a day on which banking institutions located in such
state are closed.
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions
thereto which have a useful life of more than one year, including
the total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented
by obligations under a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied and the
initial Loan is made under the Agreement.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property
and interests in Property that now or hereafter secure the
payment and performance of any of the Obligations.
Computer Hardware and Software - all of Borrower's rights
(including rights as licensee and lessee) with respect to (i)
computer and other electronic data processing hardware, including
all integrated computer systems, central processing units, memory
units, display terminals, printers, computer elements, card
readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer
hardware; (ii) all Software and all software programs designed
for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system
software, utilities and application programs in any form (source
code and object code in magnetic tape, disk or hard copy format
or any other listings whatsoever); (iii) any firmware associated
with any of the foregoing; and (iv) any documentation for
hardware, Software and firmware described in clauses (i), (ii)
and (iii) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Contract Right - any right of Borrower to payment under a
contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by
performance.
Current Assets - at any date means the amount at which all
of the current assets of a Person would be properly classified as
current assets shown on a balance sheet at such date in
accordance with GAAP except that amounts due from Affiliates and
investments in Affiliates shall be excluded therefrom.
Current Liabilities - at any date means the amount at which
all of the current liabilities of a Person would be properly
classified as current liabilities on a balance sheet at such date
in accordance with GAAP excluding the Loans and current
maturities of any long-term Indebtedness.
Debt Service Coverage Ratio - means, for Borrower on a
Consolidated basis, the ratio of (A) Operating Cash Flow, to (B)
interest expense plus principal paid (including capitalized lease
obligations), all as calculated for the immediately preceding
four fiscal quarters.
Default - an event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both,
become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the
Agreement.
Distribution - Any dividend, distribution or payment of
cash, securities or property directly or indirectly on account
of, or for the purchase, redemption or retirement of, any capital
stock of the Borrower or any Subordinated Debt.
Dominion Account - a special account established by Borrower
pursuant to the Agreement at the Bank, and over which Lender
shall have sole and exclusive access and control for withdrawal
purposes.
EBITDA - with respect to any fiscal period, the sum of
Borrower's net earnings (or loss) before interest expense, taxes,
depreciation and amortization for said period as determined in
accordance with GAAP.
Eligible Account - an Account arising in the ordinary course
of Borrower's business from the sale of goods or rendition of
services which Lender, in its sole credit judgment, deems to be
an Eligible Account. Without limiting the generality of the
foregoing, no Account shall be an Eligible Account if:
(i) it arises out of a sale made by Borrower to a
Subsidiary or an Affiliate of Borrower or to a Person
controlled by an Affiliate of Borrower; or
(ii) it is due or unpaid more than ninety (90) days
after the original invoice date; or
(iii) 50% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(iv) the total unpaid Accounts of the Account Debtor
(other than Gwinette County Public Schools) exceed 20% of
the net amount of all Eligible Accounts, to the extent of
such excess; or
(v) the total unpaid Accounts of Gwinette County Public
Schools exceed 25% of the net amount of all Eligible
Accounts, the extent of such excess; or
(vi) any covenant, representation or warranty contained
in the Agreement with respect to such Account has been
breached; or
(vii) the Account Debtor is also Borrower's creditor or
supplier, or the Account Debtor has disputed liability with
respect to such Account, or the Account Debtor has made any
claim with respect to any other Account due from such
Account Debtor to Borrower, or the Account otherwise is or
may become subject to any right of setoff by the Account
Debtor; or
(viii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted
or hereafter amended, or made an assignment for the benefit
of creditors, or a decree or order for relief has been
entered by a court having jurisdiction in the premises in
respect of the Account Debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter
amended, or any other petition or other application for
relief under the federal bankruptcy laws has been filed
against the Account Debtor, or if the Account Debtor has
failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or
(ix) it arises from a sale to an Account Debtor outside
the United States, unless the sale is on letter of credit,
guaranty or acceptance terms, in each case acceptable to
Lender in its sole discretion; or
(x) it arises from a sale to the Account Debtor on a
guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
(xi) it arises from a sale to the Account Debtor on a
xxxx-and-hold sale unless the agreement between the Account
Debtor and Borrower with respect to such xxxx-and-hold sale
has been received by Lender and is satisfactory in form and
content to Lender; or
(xii) the Account Debtor is the United States of
America or any department, agency or instrumentality
thereof, unless Borrower assigns its right to payment of
such Account to Lender, in a manner satisfactory to Lender,
so as to comply with the Assignment of Claims Act of 1940
(31 U.S.C. 'SS'203 et seq., as amended); or
(xiii) the Account is subject to a Lien other than a
Permitted Lien; or
(xiv) the goods giving rise to such Account have not
been delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed
by Borrower and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or
(xv) the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
(xvi) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business
for prompt payment and which discounts or allowances are
reflected in the calculation of the face value of each
invoice related to such Account; or
(xvii) Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof.
Environmental Laws - all federal, state and local laws,
rules, regulations, ordinances, programs, permits, guidances,
orders and consent decrees relating to health, safety and
environmental matters.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time
promulgated thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
GAAP - generally accepted account principles in the United
States of America in effect from time to time.
Guarantor - any Person who may hereafter guarantee payment
or performance of the whole or any part of the Obligations.
Guaranty and Security Agreement - the Continuing Guaranty
and Security Agreements which are to be executed by each
Guarantor, if any, in form and substance satisfactory to Lender.
Indebtedness - as applied to a Person means, without
duplication
(i) all items which in accordance with GAAP would be
included in determining total liabilities as shown on the
liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease
Obligations,
(ii) all obligations of other Persons which such Person
has guaranteed,
(iii) all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for
the account of such Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Intellectual Property - all past, present and future: trade
secrets, know-how and other proprietary information; trademarks,
internet domain names, service marks, trade dress, trade names,
business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and the
goodwill of the business relating thereto and all registrations
or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights
(including copyrights for computer programs) and copyright
registrations or applications for registrations which have
heretofore been or may hereafter be issued throughout the world
and all tangible property embodying the copyrights, unpatented
inventions (whether or not patentable); patent applications and
patents; industrial design applications and registered industrial
designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software,
source codes, object codes, executable code, data, databases and
other physical manifestations, embodiments or incorporations of
any of the foregoing; the right to xxx for all past, present and
future infringements of any of the foregoing; all other
intellectual property; and all common law and other rights
throughout the world in and to all of the foregoing.
Interest Period - as applicable to any LIBOR Advance, a
period commencing on the date a LIBOR Advance is made, and ending
on the date which is one (1) month, two (2) months, three (3)
months, or six (6) months later, as may then be requested by
Borrower; provided that (i) any Interest Period which would
otherwise end on a day which is not a Business Day shall end in
the next preceding or succeeding Business Day as is Lender's
custom in the market to which such LIBOR Advance relates; (ii)
there remains a minimum of one (1) month, two (2) months, three
(3) months or six (6) months (depending upon which Interest
Period Borrower selects) in the Term; and (iii) all Interest
Periods of the same duration which commence on the same date
shall end on the same date.
Letter of Credit - means the standby irrevocable letter of
credit issued by the Bank pursuant to subsection 1.1.2 hereof.
Leverage Ratio - means the ratio of (A) Total Liabilities
minus Subordinated Debt to (B) Tangible Net Worth.
LIBOR - as applicable to any LIBOR Advance, the rate per
annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) as determined on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such
LIBOR Advance which appears on the Telerate page 3750 as of 11:00
a.m. (London time) on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Advance; provided, however,
if the rate described above does not appear on the Telerate
System on any applicable interest determination date, the LIBOR
rate shall be the rate (rounded upwards as described above, if
necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page
"LIBO" (or such
other page as may replace the LIBO Page on that service for the
purpose of displaying such rates), as of 11:00 a.m. (London
Time), on the day that is two (2) London Banking Days prior to
the beginning of such interest period. If both the Telerate and
Reuters systems are unavailable, then the rate for that date will
be determined on the basis of the offered rates for deposits in
U.S. dollars for a period of time comparable to such LIBOR
Advance which are offered by four (4) major banks in the London
interbank market at approximately 11:00 a.m. (London time), on
the day that is two (2) London Banking Days preceding the first
day of such LIBOR Advance as selected by Lender. The principal
London office of each of the major London Banks so selected will
be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided,
the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis
of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such LIBOR Advance
offered by major banks in New York City at approximately 11:00
a.m. (New York City time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Advance. In
the event that Lender is unable to obtain any such quotation as
provided above, it will be determined that LIBOR pursuant to a
LIBOR Advance cannot be determined. In the event that the Board
of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of Bank then for any
period during which such Reserve Percentage shall apply, LIBOR
shall be equal to the amount determined above divided by an
amount equal to 1 minus the Reserve Percentage.
LIBOR Advance - any Loan bearing interest computed by
reference to the LIBOR.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or
contract. The term "Lien" shall also include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person
for security purposes.
Loan Account - the loan account established on the books of
Lender pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the
Security Documents.
Loans - all loans and advances of any kind made by Lender,
and/or by any affiliate of Lender, pursuant to the Agreement.
London Banking Day - any date on which commercial banks are
open for business in London, England.
Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness,
whether or not in any such case arising from the lending by any
Person of money to Borrower, (A) which is represented by notes
payable or drafts accepted that evidence extensions of credit,
(B) which constitutes obligations evidenced by bonds, debentures,
notes or similar instruments, or (C) upon which interest charges
are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit
or guaranties of letters of credit and (v) Indebtedness of
Borrower under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by Borrower.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Net Income - for any period means net profit after taxes for
such period.
Obligations - all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all
interest, fees and other charges thereon, owing, arising, due or
payable from Borrower to Lender, and/or to any affiliate of
Lender, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether
arising under the Agreement or any of the other Loan Documents or
otherwise whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising and however
acquired, including without limitation, the obligation to
reimburse the Bank for any draws under the Letter of Credit.
Operating Cash Flow - EBITDA minus unfinanced Capital
Expenditures and cash taxes.
Organizational I.D. Number - the organizational
identification number assigned to a Person by the applicable
governmental unit or agency of the jurisdiction of organization
of such Person.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Parent, Borrower, any
Subsidiary of Borrower or any other third party and delivered to
Lender in respect of the transactions contemplated by the
Agreement.
Overadvance - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans exceeds the Borrowing
Base.
Parent - Emtec, Inc., a Delaware corporation.
Participating Lender - each Person who shall be granted the
right by Lender to participate in any of the Loans described in
the Agreement and who shall have entered into a participation
agreement in form and substance satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - (A) Purchase Money
Indebtedness of Borrower to Xxxxxx Micro Inc., (B) Purchase Money
Indebtedness of Borrower to MRA Systems, Inc. dba GE Access, and
(C) Purchase Money Indebtedness of Borrower (other than Purchase
Money Indebtedness to referred to in clauses (A) and (B) of this
definition) not to exceed $200,000 incurred in any fiscal year.
For the purposes of this definition, the principal amount of any
Purchase Money Indebtedness consisting of capitalized leases
shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business
trust, or unincorporated organization, or a government or agency
or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Projections - Borrower's forecasted [Consolidated and
consolidating] (a) balance sheets, (b) profit and loss
statements, (c) cash flow statements, and (d) capitalization
statements, all prepared on a consistent basis with Borrower's
historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all
or any part of the purchase price of any fixed assets, (ii) any
Indebtedness (other than the Obligations) incurred at the time of
or within ten (10) days prior to or after the acquisition of any
fixed assets for the purpose of financing all or any part of the
purchase price thereof, and (iii) any renewals, extensions or
refinancings thereof, but not any increases in the principal
amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all
times be confined solely to the fixed assets the purchase price
of which was financed through the incurrence of the Purchase
Money Indebtedness secured by such Lien.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Reserve Percentage - the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and
other reserves) which is imposed on member banks of the Federal
Reserve System against "Euro-currency Liabilities" as defined in
Regulation D.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of
stock, Indebtedness or other obligation or Security, or by loan,
advance or capital contribution, or otherwise, or in any Property
except the following:
(i) Property to be used in the ordinary course of
business;
(ii) Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrower;
(iii) investments in direct obligations of the United
States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that
such obligations mature within one (1) year from the date of
acquisition thereof;
(iv) investments in certificates of deposit maturing
within one (1) year from the date of acquisition issued by a
bank or trust company organized under the laws of the United
States or any state thereof having capital surplus and
undivided profits aggregating at least $100,000,000; and
(v) investments in commercial paper given the highest
rating by a national credit rating agency and maturing not
more than 270 days from the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in
Section 2.1 of the Agreement.
Revolving Credit Note - the Revolving Credit Note to be
executed by Borrower on or about the Closing Date in favor of
Lender to evidence the Revolving Credit Loan, which shall be in
the form of Exhibit A to the Agreement.
Schedule of Accounts - as defined in subsection 6.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - the Guarantee and Security Agreement
and all other instruments and agreements now or at any time
hereafter securing the whole or any part of the Obligations.
Solvent - as to any Person, that such Person (i) owns
Property whose fair saleable value is greater than the amount
required to pay all of such Person's Indebtedness (including
contingent debts), (ii) is able to pay all of its Indebtedness as
such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and
transactions in which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is
subordinated to the Obligations in a manner satisfactory to
Lender.
Subordination Agreement - any subordination agreement
executed by Borrower, and approved by Lender, in connection with
any Subordinated Debt.
Subsidiary - any corporation of which a Person owns,
directly or indirectly through one or more intermediaries, more
than 50% of the Voting Stock at the time of determination.
Tangible Assets - means all assets of Borrower on a
Consolidated basis that would, in accordance with GAAP, be
classified as tangible assets of Borrower on a Consolidated basis
less any amount due from Subsidiaries or Affiliates not otherwise
eliminated by such consolidation.
Tangible Net Worth - means the amount by which Tangible
Assets exceed Total Liabilities.
Term - as defined in Section 4.1 of this Agreement.
Termination Date - the date on which the obligation of
Lender to make Loans hereunder is terminated whether pursuant to
Section 4.2 of this Agreement or otherwise.
Total Liabilities - means the sum of (A) all liabilities of
Borrower on a Consolidated basis that would, in accordance with
GAAP, be classified as liabilities of Borrower on a Consolidated
basis plus (B) all obligations of Borrower on a Consolidated
basis with respect to contingent liabilities not otherwise
classified as liabilities pursuant to (A), above.
Total Credit Facility - $10,000,000.00.
Type of Organization - with respect to Borrower, the kind or
type of entity by which Borrower is organized, such as a
corporation or limited liability company.
UCC - the Uniform Commercial Code as in effect in the State
of New Jersey on the date of this Agreement, as the UCC may be
amended or otherwise modified.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence
of contingencies, entitled to elect a majority of the corporate
directors (or Persons performing similar functions).
Other Terms All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by
the UCC to the extent the same are used or defined therein.
Certain Matters of Construction The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to the
Agreement as a whole and not to any particular section, paragraph
or subdivision. Any pronoun used shall be deemed to cover all
genders. The section titles, table of contents and list of
exhibits appear as a matter of convenience only and shall not
affect the interpretation of the Agreement. All references to
statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references
to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals
thereof.
